CA’s Piece Rate Law and Unpaid Overtime in Construction Industry

There are several trades within California’s construction industry where employees are paid on a piece-rate basis. This means they are paid a fixed amount of money for a unit produced, rather than on the number of hours worked. For example, a roofer is paid per “square” produced and a drywall subcontractor employee is paid per “square foot” hung.

But what many construction workers don’t know is that California employment law requires piece-rate employees be paid overtime pay for all hours worked in excess of 8hrs in a day or 40hrs in a week. Unfortunately, many construction contractors and subcontractors fail to pay overtime to piece-rate employees. If you are one of these workers, you may be owed substantial backpay and unpaid overtime.

Piece Rate Overtime Lawyer

Overtime pay is required by Labor Code § 510. While California’s piece-rate laws have evolved dramatically in the last three years, the law has always been clear regarding overtime. This new law applies to all facets of the construction industry including:

But How is Overtime Calculated in Piece-Rate Pay Structure?

This is where the piece-rate system gets extremely tricky. If you’re not being paid by the hour, how do you accrue overtime? Well, its based on the time you spent working. California’s law is clear that any time that you are subject to the control of the employer you are “on the clock” for purposes of overtime whether you are punching in and out of an actual time clock at work. Therefore, if you work for 10 hours on Monday, you should get paid 2 hours of overtime.

OK, but how is OT calculated in a piece-rate system? It’s calculated based on the employees “regular rate of pay.” The regular rate of pay is calculated by first determining the employees effective hourly rate for the workweek based on the number of hours worked. Then the total compensation earned during the week (including piece-rate compensation, bonuses, commissions) is divided by the total number of hours worked. For example, if the employee worked 50 hours and earned $700 by the piece-rate system, the employees regular rate of pay would be$14/hr ($700/50=$14). Since the employee has already earned straight time pay for the 10 OT hours worked ($14/hr), he still needs to be paid his OT premium of $7/hr. That means the employee should be paid an additional $70 for the workweek ($7 x 10 = $70).

This is a simplified example of a very complicated area of law.

Pay-Stub Requirements for Piece-Rate Comp Plans

Because of the complexity of piece-rate comp plans in the construction industry, employers are supposed to keep extremely accurate records of exactly how it works. Unfortunately, most do not. Wage statements issued to piece-rate employees are supposed to separately list the total hours of compensable rest and recovery periods, the rate of compensation, the total hours of non-productive time, and all the other requirements of Labor Code § 226(a). The paystub should completely break down how the employee was paid and make it easy to understand. If it does not, CA’s labor code specifies penalties that will be awarded to the employee.

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